LIFE INSURANCE BASICS

Life insurance claims

There is a saying, “if you don’t ask, you don’t get.” Life insurance works in the exact same way. It supports you and your loved ones financially in the event of your untimely death. But to get this support, you have to claim it. It’s, thus, important to know how well you are to handle the claims process.

Claim settlements can be time-consuming. Sometimes, life insurance claims are rejected, and people are left clueless about why. But settling claims promptly is the primary responsibility of any insurance company, which is why being informed about the basics of life insurance claims can reduce delay and frustration during the process.    

Related: Life insurance- why it’s so incredibly important

Where do I begin?

The first step in making a life insurance claim is reaching out to the party who sold the policy to you- be it your financial advisor or your insurance company. They will request you to fill a claims form and submit the required documents.

What are the types of life insurance claims?

Life insurance involves two types of claims: maturity claims and death claims.

  • Maturity claims: Many of us purchase insurance hoping to survive the full term of the policy and be eligible to claim the maturity value. In this case, you file a claim to collect the maturity amount from the insurance company once the agreed upon tenure is over.
  • Death claims: In the event of your death, the claim amount is paid to the person you have assigned as your nominee in the policy document.

Related: Types of insurance plans

How are claims settled?

There are 3 things you must know and remember about the claims settlement process:

  • Claim intimation: The insurance company cannot begin the claim settlement process without receiving the required information from the claimant. Thus, your family or nominee should first inform the insurance company about the claim via a claims form. This form should be submitted to the financial advisor or the insurance office. These days, you can also download the form from the insurance company’s website.
     
  • Documents required: Just as purchasing a policy requires certain documents to be submitted, some basic documents, like the original policy document, the claim form, the death certificate, and hospital records (if applicable), are required for claim as well. The insurance company informs the claimant in writing if additional documents are needed.
     
  • Time allotted: Unfortunate circumstances may not allow our loved ones to pursue claim settlement immediately, but it is advisable to proceed as soon as possible. Notably, according to the guidelines provided by the IRDA, the insurance company is obliged to settle all claims within 30 days of receiving of all documents. If your insurance company feels a further investigation is required, it can take up to a maximum of six months from the date of first receiving your claim intimation.     

Why are claims rejected?

Insurance companies promise to pay the life cover in the event of death, but, in some cases, may reject your claim. Here are possible reasons why:

  • Lack of knowledge: A claim can be rejected because it is not covered under the policy’s terms and conditions. That is why it is important to read the policy document carefully and to discuss policy exclusions with your advisor or insurance company. A policy can even be returned within 15 days of purchase if you do not agree with any of the terms or conditions.
     
  • Non-disclosure of facts: People occasionally fail to disclose their correct age or occupation, or any major illness-related information at the time of purchase of a policy. As this is misleading, the insurance provider could reject the claim when the truth is uncovered. To avoid such an error, you need to understand that a life insurance company evaluates your risk on the basis of the information you disclose. It then decides your insurance premium, so it’s important you don’t hold back any information.
     
  • Disparity in forms: Most people trust their financial advisor to fill the policy proposal on their behalf and do not check the details. The incorrect information mentioned erroneously on the proposal form could cause trouble later. It is thus better to fill the form yourself.

Claiming life insurance is the most important step in the whole process.  Be sure to know these steps and you’ll face no problem getting the cover you signed up to receive.